Bitcoin's price dropped sharply Monday, as investors started to reduce risk in the face of a decline in global equity markets.
Although bitcoin is often referred to as a safe-haven asset, it is becoming increasingly clear that its price tends downwards when there are wider declines in risk assets. Like stocks, bitcoin's prices often experience a September slide.
According to Coin Metrics, Bitcoin lost 10% Monday. It last traded at $42,634, according to Coin Metrics. The wider crypto market is also in red, with ether down 12% to $2985.95.
Investors are worried about the spread of risk from a shakeout occurring in China's property markets linked to Evergrande, a highly indebted developer. This is causing global equity markets to slide. Investors are also focusing on the Federal Reserve and whether or not it will signal that it is ready to remove monetary stimulus from its economy. Tuesday will be the start of the central bank's two-day meeting.
As uncertainty over the regulation of stablecoins increases, crypto is in decline. According to the New York Times, they could be designated systemically risky by the Financial Stability Oversight Council. This could lead to severe regulation for their operators.
The President's Working Group on Financial Markets has been working on a report on stabilitycoins. This month, the Fed will likely release a report on central banks digital currencies that could include discussion about stablecoin risk.
As bitcoin fell, its older rival, Gold, was up 0.4% with futures.
